#1) Which of the following accurately describes how foreign exchange arbitragers can use the difference in exchange rates?

Arbitragers can make a profit of 3 cents on each pound.

Arbitragers can make a profit of 1/3 cent on each pound.

Arbitragers can decrease the price of pounds in New York.

Arbitragers can increase the price of pounds in London.

#2) Which of the following accurately explains how foreign exchange arbitrage results in the same dollar/pound exchange rate in New York and London?

As more pounds are bought in New York, the pound price rises; as more pounds are sold in London, the pound price falls.

As fewer pounds are bought in New York, the pound price rises; as more pounds are sold in London, the pound price falls.

As more pounds are bought in New York, the pound price falls; as more pounds are sold in London, the pound price rises.

As more pounds are bought in New York, the pound price rises; as fewer pounds are sold in London, the pound price falls.